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Virgin Money’s H1 pretax profit up 26 pct

British challenger bank Virgin Money Holdings Plc posted a 26 percent rise in first-half underlying pretax profit on Tuesday, helped by growth in the bank’s core mortgages, savings and credit card businesses.

Underlying pretax profit rose to 128.6 million pounds ($167.68 million) for the six months ended June compared with 101.8 million pounds a year earlier.

The lender, which reported a 7 percent rise in mortgage balances, said Britain’s housing market is expected to remain “resilient”, but warned in the near term warned that there may be some “areas of weakness to be navigated”.

“Mortgage spreads are expected to continue to face some pressure,” the lender said.

Britain’s housing market has come under pressure in recent months. Asking prices for houses and apartments in England and Wales stabilised between June and July, after a drop the previous month, but home-buyers remain cautious as wage growth falls behind inflation.

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“Although the UK economy has remained resilient during the first half of the year, including stable GDP and house prices and record employment, post referendum economic uncertainty remains,” Virgin Money said, referring to Britain’s vote to leave the European Union.

Both home-buyers and shoppers are under pressure from a squeeze on real take-home pay as consumer price inflation rises at its fastest pace in nearly four years while wage growth slows.

The Bank of England ordered banks to apply credit rules prudently and prove by September they are not being too complacent about risks to their balance sheets.

Virgin Money said on Tuesday that it does not lend in the unsecured personal loan or motor finance markets.

The lender’s credit cards business, which contributed 27.9 percent of total income in the first half, saw balances rise to 2.8 billion pounds.

The bank said it was still planning to hit its target of 3 billion pounds in credit card balances by the end of this year, saying it could do so with no deterioration of asset quality. (Reuters)

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